Accelerating implementation of infrastructure projects

Roadblocks in accelerating infrastructure development

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Funding constraints, land acquisition issues, delays and shortage of skilled manpower are some of the major reasons that are currently causing delays in infrastructure projects.

While the intent of the Government may be in the right direction, there are multiple roadblocks that are likely to hamper any move to accelerate development of infrastructure.

Funding constraints, land acquisition issues, delays related to identification and award of projects and shortage of skilled manpower are some of the major reasons that are currently causing delays in infrastructure projects.

The Twelfth Plan’s targets appear ambitious, especially in view of the state of the economy and the backlog in meeting targets set in the Eleventh Plan. They, however, are still achievable if some of the major roadblocks are removed. These are common across the different sectors at various stages of projects — from project planning to the post-construction stage.

Major roadblocks to infrastructure development
Major roadblocks to  infrastructure development

Land acquisition

Land acquisition is at present the single-largest roadblock for development of infrastructure. Several projects have been stalled or delayed due to land acquisition issues. The primary reason is resistance from local communities. There is generally a huge difference between the registered value offered and the actual market value, which results in disputes and litigation. Lack of well-planned, efficient and demonstrable rehabilitation packages adds to the distrust of local communities.

Delay in regulatory and environmental clearance

While it is important to have a rigorous regulatory framework that ensures transparency and quality, bureaucratic complexities and the protracted procedure for securing approvals are often considered serious disincentives for developers and contractors. The broad issues that delay progress of projects relate to two categories — regulatory approvals and environmental clearance.

Funding constraints

Funding is another major roadblock in implementation of infrastructure projects. There is increasing reliance on the private sector for developing and maintaining infrastructure. The private sector, however, needs funds to develop infrastructure projects that are capital-intensive and have a high gestation period.

Capacity of private players

Another emerging challenge for achievement of the targets set by the Twelfth Plan (of INR 40 trillion) will be the capacity of the private sector to undertake or implement projects. This includes project developers or investors and EPC contractors. However, the total number of such players is low and they have already secured several projects, which limits their capacity to undertake new ones.

 


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Contacts

  • Adil Zaidi  
    Associate Director, EY
    011-4363 3230